FISCAL NOTE
Date Requested: January 19, 2022
Time Requested: 04:14 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1443 |
Introduced |
SB426 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Increases Revenue From Existing Sources, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to increase the raise of taxation on cigarettes to $1.50 and the tax on nicotine in e-cigarettes and vapes to an equal rate.
According to our interpretation, the bill would increase the excise tax on cigarettes from $1.20 to $1.50 on each 20 cigarettes or in like ratio on any part thereof. The bill would also increase the excise tax on e-cigarette liquid from 7.5 cents per milliliter to 9.75 cents per milliliter or fraction thereof. The bill does not state an effective date, but it leaves in place the effective date of the last rate increase July 1, 2016.
Based on our interpretation, if the bill is effective immediately upon passage, the proposed legislation would increase General Revenue Fund collections by $8.0 million in FY2022, $32.2 million in FY2023, $27.6 million in FY2024, and by decreasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $75,000 in FY2022.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2022
Increase/Decrease
(use"-") |
2023
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
75,000 |
0 |
0 |
| Personal Services |
5,000 |
0 |
0 |
| Current Expenses |
25,000 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
45,000 |
0 |
0 |
| 2. Estimated Total Revenues |
8,000,000 |
32,200,000 |
27,600,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the bill would increase the excise tax on cigarettes from $1.20 to $1.50 on each 20 cigarettes or in like ratio on any part of 20 cigarettes. The bill would also increase the excise tax on e-cigarette liquid from 7.5 cents per milliliter to 9.75 cents per milliliter or fraction thereof. The bill does not state an effective date, but it leaves in place the effective date of the last rate increase July 1, 2016.
Based on our interpretation, if the bill is effective immediately upon passage, the proposed legislation would increase General Revenue Fund collections by $8.0 million in FY2022, $32.2 million in FY2023, $27.6 million in FY2024, and by decreasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $75,000 in FY2022.
Memorandum
The stated purpose of this bill is to increase the raise of taxation on cigarettes to $1.50 and the tax on nicotine in e-cigarettes and vapes to an equal rate.
The bill does not state an effective date for the amendments increasing the cigarette and e-cigarette liquid tax. The bill leaves in place the effective date of the last rate increase, making it appear that the new tax rates on cigarettes and e-liquid began on July 1, 2016. This is problematic when collecting, administering, and enforcing the tax. Delinquent or unreported taxes since July 1, 2016 may be more difficult to collect and enforce.
Section 11-17-3(d) states, in part “Amendments to this section enacted in the year 2016 apply in determining tax imposed under this article effective on and after July 1, 2016.” This may give rise to uncertainty and arguments that the lower 2016 rate supersedes the higher 2022 rate on cigarettes or nullifies it altogether.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov